Commentary

Frary: Adventurous Investments

By Prof. John Frary — I was amazed to hear recently about a wealthy New Yorker who converted all his assets into stocks in cutting-edge green energy companies. The boldness, even recklessness, of this decision dazzled me. Then I learned that he was a legislator and amazement ceased – I knew then the story was false. Elected officials don’t invest their own money in risky ventures. They invest the tax payer’s money.

Mind you, anyone who invests in a wind or solar power company that succeeds in producing electricity at competitive rates without subsidies will make a pile, but the extreme risk in all futuristic energy investments arises from the variety of potential energy solutions. A reminder of this just came with the arrival of Quest: Research News from PPPL, a supplement enclosed in my Princeton University Alumni magazine. There I read about the Princeton Plasma Physics Laboratory’s “new paths to fusion energy” and “advancing fusion theory.”

PPPL director, Stewart Prager, explains that “Fusion powers the sun and stars, and harnessing its power on Earth could provide a safe, clean, and virtually limitless way to meet global energy needs.” If Princeton’s wizards and its international partners achieve a fusion energy solution every other energy investment will suffer a steep loss. Many, or most, will sink without a trace.

The “could” is the rub. Quest can’t promise fusion energy. It can only promise that the millions it receives from the U.S. Department of Energy will produce research. Some of this will certainly prove valuable, but the fusion break-through the PPPL seeks may never happen.

When I ran for Congress in 2008 I spent a lot of time educating myself on energy issues. That was not enough to make me an expert, but it was enough to acquire some knowledge about the basics. The aspect which impressed me above all others was the huge number and variety of innovative production and conservation projects then under consideration.

One website, nextenergynews.com, attempted a comprehensive overview of these innovations. There were many other sites to examine, but this one provided a continuous stream of reports on energy developments under thirteen separate headings: aerospace, alternate fuels, batteries, electronics, fuel cells, hydrogen, hydro/water, nuclear, solar cells, thermal, vehicles, waste power, wind power.

The Aerospace category, which seemed a little odd at first glance, included an article entitled “SkyHook Develops Heavy Payload, Remote Transport Helium Blimp” about a Canadian company’s development of a new aircraft, “filled with helium and powered by four rotors, which will be used to move materials in remote areas including the Canadian North.” Another article, entitled “Construction Begins of the 200 mph, Solar Powered Turtle Airship,” described a demonstration model of a new form of lighter-than-air airships by Turtle Airships Company. It’s solar powered and can reach speeds of 200 mph. The company’s release boasts that “We can save over $100 billion each year on fuel costs alone, another several hundred billion dollars in airport construction, and eliminate a major source of carbon emissions. Airships are a trillion dollar industry, still in its’ infancy, that will grow for decades.”

This is not a recommendation to invest in SkyHook International or Turtle Airships. They may very well turn out to be frauds or failures. These examples simply serve to show that the number of innovative projects and developments in the energy sector is huge. Some envision billions of dollars in energy savings, others millions. Some are visionary, e.g. “New Electric Solar Wind Sail Could Power the Earth From Space;” others concern niche industries, e.g., “World’s Smallest Helicopter To Make Demonstration Flight in Italy.”

Many of these innovations and the companies initiating or investigating them will fail. Some may make billions. Some will make a small difference, others a huge difference. The central point is that the possibilities seem almost infinite in number. There are dozens under the “Aerospace” heading alone just for the years 2007 and 2008.

The most authoritative website is the one maintained by the U.S. government’s Energy Information Administration which spends over one hundred million dollars a year to collect relevant information on all energy production factors and issues an Annual Energy Outlook (AEO) report containing projections and analyses of energy topics. A comparison of AEO 2008 (from the same year Maine’s Democratic legislative majority enacted the Wind Energy Act) with AEO 2013 is instructive. Five years ago the EIA estimated that coal would produce over forty percent of America’s energy by 2035. This year it projects that energy generation from coal will fall to 35 percent as natural gas generation rises to 30 percent. And it presents an alternate scenario in which coal will amount to 27 percent of total generation as natural gas rises to 43 percent.

I found no information on shale gas or fracking in the AEO 2008 calculations. These unforeseen developments forced an enormous revision in projections. We can’t fault the EIA for this. It can only project from available technologies and regulations. It has no prophetic powers enabling it to foretell which novel technologies will succeed and which will fail. If the PPPL suddenly succeeds all its long-term projections fall apart.

We might have expected the environmentalists to welcome news that natural gas has the potential to displace coal. In fact, they seem to obsess about anything and everything that could go wrong that scenario. They might at least acknowledge the finding by Duke University’s Nicholas School of Environmental Studies that there was no groundwater contamination from gas fracking in Arkansas, or that Pennsylvania’s Department of Environmental Protection has concluded that naturally occurring shallow gas was responsible for the contamination of well water in three private homes that recently excited them.

They don’t seem interested. I’m guessing they consider Josh Fox’s horror films Gasland I and Gasland II more reliable and interesting. Anyway they can console themselves with the new BP Statistical Review of World Energy which shows renewables (good renewables like solar and and wind, not those damn dams) experiencing a 180 percent growth in total output during 2005-2012, with coal growing only 27 percent. On the other hand that surge in renewables will leave them with a minuscule fraction of total energy production, even as the world’s economic dependence on coal grows.

Governor LePage clearly sees Maine’s high energy costs as the primary drag on the state’s economic development, He is open to all possible solutions but is focused on facilitating the use of natural gas and removing the obstacles to tapping into HydroQuebec’s cheap and abundant supply of electricity by removing the obstacles embodied in our Renewable Portfolio Standards (RPS).

The Democrats’ emphasis appears to be on greener rather than cheaper energy, although they may hope that innovations in wind power generation will make it cheaper in time. The five years which have elapsed since the Wind Power Act have brought some advances but they have also brought news that European nations have pulled back from those projects. In the meantime there’s no denying that the RPS mandates, based on the state of technology now five years old, have made energy more expensive.

The reaction of the Democrats and their allies among the environmental “advocates” to the huge developments in shale gas production is exemplified the law enacted in Vermont last year banning fracking in that state. This won’t affect energy prices anywhere since the only known natural gas in that state is found in propane tanks. Nevertheless, Governor Shumlin is hopeful that his state’s ban, the nation’s first, will set an example for the rest of the nation.

Word reaches me that the Vermont has indeed inspired some of the Democratic party’s newcomers in our legislature to hope for a similar ban here in Maine, although Texans, Pennsylvanians, Arkansans, and North Dakotans remain indifferent. They seem to like cheap energy and the royalty income shale gas exploitation brings to their state treasuries.

Confident predictions about our energy future may be foolish, but I will make one prediction with absolute certainty. If those thousands of wind-power projects end as rusting derelicts no politician or advocate who supported them will suffer for it; no one will be held accountable. Politically motivated investments are the most risk-free ventures known to man.

Readers interested in shale gas developments will find a huge amount of information on shaleblog.com. Envirogeeks are warned off. They will not find the bad news they hunger for there.

Professor John Frary of Farmington, Maine is a former US Congress candidate and retired history professor, a Board Member of Maine Taxpayers United and publisher of www.fraryhomecompanion.com and can be reached at: jfrary8070@aol.com

About John Frary

Professor John Frary of Farmington, Maine is a former US Congress candidate and retired history professor, a Board Member of Maine Taxpayers United and publisher of www.fraryhomecompanion.com and can be reached at: jfrary8070@aol.com